Straight From The Mayonnaise Jar, Forecasts For 2010

By Eric Savitz

In my Tech Trader column in the print edition of Barron’s over the weekend, I opened up my hermetically sealed mayonnaise jar, which had been sitting on Funk & Wagnalls doorstep for only Karnak knows how long, and provided some prognostications. I reprise them here:

IT spending booms. Driven by a pickup in the economy, highly improved server processors, the spread of virtualization technology and cloud computing, and the PC refresh cycle, 2010 will be a big year for enterprise-computing companies. Oracle(ORCL), HP(HPQ), IBM(IBM) and the like should thrive.

Microsoft (MSFT) has a big year. The Redmond giant is on something of a roll already, with good early results for Bing and Windows 7. In 2010, we’ll see an Office upgrade, the closing of the Yahoo!(YHOO) deal, upgraded server applications and other products. The wildcard: the possibly early arrival of Windows Mobile 7. As the Wall Street Journal noted last week, the company is being clobbered in smartphones, and must quickly fix its mobile operating system or risk becoming a non-factor in the hottest tech market.

In smartphones, the rich get richer, and the poor get poorer. As demand keeps expanding, competition keeps intensifying. Apple(AAPL) introduces new iPhones, to the usual acclaim. Research In Motion(RIMM) fends off the competition in the enterprise, and benefits from the IT spending pickup. Palm(PALM) disappoints, fueling takeover speculation. Nokia(NOK) loses more share, and its new version of Symbian doesn’t impress; in desperation, it considers buying Palm. Motorola(MOT) improves, but the many versions of Android confuse consumers, and the recovery isn’t as robust as some hope. Dell‘s (DELL) smartphones don’t gain traction. It also considers buying Palm.

Intel(INTC) has a good year, driven by the strong PC growth, but faces tougher competition from new sources, particularly Qualcomm‘s (QCOM) Snapdragon processor, and chips based on designs from ARM Holdings(ARMH). In fact, QCOM and ARMH become more important Intel rivals than Advanced Micro Devices(AMD).

AOL(AOL) sells off some pieces, then is acquired by Yahoo! or Microsoft. Microsoft replaces Google(GOOG) as AOL’s search provider. AOL’s access business is unloaded to EarthLink(ELNK) or United Online(UNTD), but AOL retains its brand name. More mergers: DirecTV(DTV) swallows Sirius XM(SIRI); MetroPCS(PCS) combines with Leap Wireless(LEAP); Electronic Arts(ERTS) makes a new run at Take-Two Interactive(TTWO); News Corp. (NWSA, Barron’s parent) decides to sell MySpace, but finds few takers; Oracle buys Informatica(INFA).

IPOs don’t increase much, and some prominent start-ups instead sell out; keep an eye on the Solyndra IPO, which could be a blockbuster that opens the door to other solar-company debuts. Google buys Twitter, drawing intense scrutiny from the Justice Department. Microsoft considers buying LinkedIn, but negotiations flounder over the conflicts from the company’s stake in Facebook.

Steve Jobs steps down as Apple CEO, but remains chairman, and continues to play a key role. Tim Cook moves up to chief executive. Apple’s tablet computer launches early in the year, as expected. With a carrier-subsidy model not unlike the iPhone’s, it’s an instant hit.

Hulu.com tries to charge for some content, but backs off when few consumers sign up. Comcast(CMCSA) and other cable providers push Web-based on-demand services hard. Comcast wins approval for its NBC Universal deal, after agreeing to sell some local NBC stations. Newspapers try but largely fail to get consumers to pay for content on the Web, and their woes deepen.

Oracle finally closes its acquisition of Sun(JAVA); in the aftermath it slashes thousands of jobs. But the hardware business turns out to be a useful asset; IT buyers appreciate the one-source shopping; the company gains share and the stock moves sharply higher.

Add a Comment

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comment

There are 5 comments

JANUARY 4, 2010 2:54 A.M.

relmor wrote:

Wow more bad opinons for Mr. Savitz. NOL buddy. No change of ownership for 2 more years, and 2 more months. So nice try. Negates about 6 billion in tax losses, ya, sure it is. Wow, you continue to be so wrong. ITs not even on the table for 2010, in LIbertys own deal language with Liberty. Liberty also agreed not to purchase more than 49.% of the company for up to 3 years.

JANUARY 4, 2010 3:46 A.M.

Intel and Microsoft wrote:

Both Intel and Microsoft placed all their eggs in the x86 processor basket, making bigger, more power-hungry devices.

They did not see that the market would go the opposite way, for energy efficient mobile devices, running on ARM processors.

JANUARY 4, 2010 12:12 P.M.

Anonymous wrote:

some interesting and some obvious predictions for sure. the last one about payd content being ignored is speculative at best though. as the amount of ads associated with and endured by the free content folk rises and in many cases equals the amount of ads in traditional TV broadcast- premium options, for no other reason than the efficiency and time spent, folk will plop down $10 bucks to watch the entire season of 24, ESPN and Dexter sans interruptions. if anything, look at the trends in media consumption, audio and video since the inception of internet media.

Make it
Do it
Makes us

Harder
Better
Faster
Stronger

More than
Hour
Our
Never

Ever
After
Work is
Over

JANUARY 4, 2010 12:27 P.M.

RS wrote:

Oracle is not buying INFA. If they wanted they would have in the last 2-3 yrs when INFA stock was reasonable. Today its trading at P/E 45 and Oracle to offer more than 3 billion for INFA is out of question.

JANUARY 4, 2010 12:34 P.M.

tyson wrote:

Interesting that you'd jailbreak your own online content from behind a paid wall, Mr. Savitz. I love your blog but don't subscribe to Barron's and so wouldn't otherwise see these predictions. I'm also betting big on a PC resurgence this year.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.